DIRECTORS REPORT TO, THE MEMBERS OF, LIPPI SYSTEM LIMITED Your directors have pleasure in presenting their Annual Report together with the Audited Annual accounts for the year ended on 31st March, 2015. OPERATIONS: Your directors are pleased to report that for the year under review, your Company has been able to achieve a net turnover of Rs. 22.91 crores as compared to Rs. 28.39 crores for the previous year. However, in spite of fall in turnover, your company could achieve a net profit of Rs. 53.65 lacs as against a net profit of Rs. 23.17 lacs for the preceding year. Your directors expect some better results for the current year. DIVIDEND: In view of the marginal profits for the year under review, your directors have not recommended any dividend for the year under report. FIXED DEPOSITS: During the year under review your company has not accepted any fixed deposits from the public and therefore no information is required to be furnished in respect of outstanding deposits. VIGIL MECHANISM/WHISTLE BLOWER POLICY: Pursuant to Section 177(9) of the Companies Act, 2013 and clause 49 of the Listing Agreement, the Company has formulated a Whistle Blower Policy to establish a vigil mechanism for directors and employees of the Company. The purpose and objective of this Policy is to provide a framework to promote responsible and secure whistle blowing. It protects the employees wishing to raise a concern about serious irregularities within the Company. The details of the Whistle Blower Policy are posted on the website (www.lippisystems.com) of the Company. (Link: <http://www.lippisystems.com/images/code_of_conductAVhistleBlowerPolicy.pdf>). RISK MANAGEMENT AND INTERNAL CONTROL SYSTEMS: The Company has established a well-defined process of risk management, where in the identification, analysis and assessment of the various risks, measuring of the probable impact of such risks, formulation of risk mitigation strategy and implementation of the same takes place in a structured manner. Though the various risks associated with the business cannot be eliminated completely, all efforts are made to minimize the impact of such risks on the operations of the Company. Necessary internal control systems are also put in place by the Company on various activities across the board to ensure that business operations are directed towards attaining the stated organizational objectives with optimum utilization of the resources. Apart from these internal control procedures, a well-defined and established system of internal audit is in operation to independently review and strengthen these control measures, which is carried out by a reputed firm of Chartered Accountants. The Audit Committee of the Company regularly reviews the reports of the internal auditors and recommends actions for further improvement of the internal controls. The Risk Management policy is posted on the website of the Company. RELATED PARTY TRANSACTIONS: The Company has entered into related party transaction with relative of promoter Ms Shashiben G. Gupta (Wife of Mr Nandlal J. Agrawal, MD & Chairman) during the financial year 2014-15, the details of which are given in the notes forming parts of Financial Statements. All Related Party Transactions entered into are on an arm's length basis. There are no materially significant Related Party Transactions made by the Company with promoters, directors, Key Managerial Personnel or other designated persons which may have potential conflict with the interests of the Company at large. On the recommendation of the Audit Committee, the Board of Directors has adopted a policy on Related Party Transactions, which is also uploaded on the website of the Company (www.lippisystems.com) under the head of'Investor'. The Policy envisages the procedure governing related party transactions required to be followed to ensure compliance with the applicable laws and regulations as well as to ensure that the Related Party Transactions are managed and disclosed in accordance with the strict legal and accounting requirements. A statement of all related party transactions is presented before the Audit Committee on a quarterly basis, specifying the nature, value and terms & conditions of the transactions. The statement is supported by a certificate from the CEO/ CFO. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company. MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT: Management's Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges, is presented in a separate section forming part of the Annual Report. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS: There are no significant and material orders passed by the Regulators/Courts which would impact the going concern status of the Company and its future operations. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT: No material changes and commitments affecting the financial position of the company have occurred between the end of the financial year of the company to which the financial statements relate and the date of this report. PARTICULARS OF LOANS. GUARANTEES OR INVESTMENTS: The company has not given any loans or guarantees or investments covered under the provisions of section 186 of the Companies Act, 2013 during the Financial Year 2014-15 TRANSFER TO RESERVES: The Company has transferred current year's profit of Rs. 53,64,738.00 to the Reserve & Surplus and the same is in compliance with the applicable provisions prescribed under the Companies Act, 2013. DEPOSITS: The Company has not accepted any deposits under the applicable provisions of the Companies Act, 2013 and the rules framed there under. DIRECTORS: The Board of Directors has appointed Ms Neha Nandlal Agrawal (Din: 027728648) as Additional Director of the Company in the category of Non Executive Woman Director with effect from 31st March, 2015 to hold office as Directors upto the date of next Annual General Meeting of the Company and has resigned from the said post of Director w.e.f. 14th April, 2015. (ii) Retirement by rotation In accordance with the provisions of the Companies Act, 2013 and Articles of Association of the Company, Mr. Minesh Chandrakant Shah (Din: 00045178) retires by rotation and is eligible for reappointment. (iii) Declarations by Independent Directors All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. (iv) Board Evaluation In compliance with the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Nomination & Remuneration Committee. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. (v) Nomination & Remuneration Policy The Board has, on the recommendation of the Nomination & Remuneration Committee, framed a Policy for selection, appointment and remuneration of Directors and Key Managerial Personnel, including criteria for determining qualifications, positive attributes, independence of Directors. More details of the same are given in the Corporate Governance Report. (vi) Board Meetings There are seven members of Board of the Directors of the company of Executive Directors, Non Executives Directors and independent directors. There is no institutional nominee on the Board. During the year Nine meetings of the Board were held. The Board of directors was met on 29/05/2014, 10/06/2014, 26/06/2014, 14/08/2014, 02/09/2014,30/09/2014,14/11/2014,14/02/2015 and 31/03/2015 The composition and attendance of Board of Directors are as: CONSERVATION OF ENERGY. TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO: The information relating to conservation of energy, technology absorption and foreign exchange earnings & outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is Annexed herewith as "Annexure - A". EXTRACT OF ANNUAL RETURN: The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as "Annexure - B". AUDIT COMMITTEE: Pursuant to Section 177 of the Companies Act, 2013 the board of directors has constituted an audit committee. The audit committee comprises of Shri Minesh C Shah (DIN: 00045178) , Shri Mahendra Patel (DIN: 03017155) and Shri Tirthraj Pandya (DIN: 02972285). . DIRECTORS' RESPONSIBILITY STATEMENT To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of the Section 134(3)(c) of the Companies Act, 2013: (I) That in the preparation of the annual financial statements for the year ended March 31, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; (ii) That such accounting policies, as mentioned in the Financial Statements as 'Significant Accounting Policies' have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at March 31,2015 and of the profit of the Company for the year ended on that date; (iii) That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) That the annual financial statements have been prepared on a going concern basis; (v) That proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; (vi) That proper systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. AUDITORS: (i) Statutory Auditors M/s. Ashok Dhariwal & Co., Chartered Accountants, have been appointed as Statutory Auditors of the Company for a period of 3 years at the last annual general meeting held on 30th September, 2014 subject to ratification of their appointment by the members at every annual general meeting. The shareholders at the ensuing annual general meeting will consider ratification of the appointment of the Statutory Auditors. As required under Clause 41 of the Listing Agreement, the Auditors have confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. (ii) Secretarial Audit Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Gaurang R. Shah, a firm of Company Secretaries in Practice, to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed herewith as "Annexure - C". (iii) Internal Auditor Pursuant to provisions of Section 138 of the Companies Act, 2013 and the Companies (Accounts) Rules, 2014, M/s M.S. JAIN & GOLECHHA, a Firm of Chartered Accountants in Practice, is appointed as an Internal Auditors of the Company for the Financial Year 2014-15. PARTICULARS OF EMPLOYEES The provisions of Rule 5(2) & (3) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 requiring particulars of the employees in receipt of remuneration in excess of Rs.60 lacs per year to be disclosed in the Report of Board of Directors are not applicable to the Company as none of the employees was in receipt of remuneration in excess of Rs. 60 lacs during the financial year 2014-15. The information required under Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 is given in the Statement annexed herewith as "Annexure - D". CORPORATE GOVERNANCE A Report on Corporate Governance along with a Certificate from the Auditors of the Company regarding compliance of the conditions of Corporate Governance pursuant to Clause 49 of the listing agreement with stock exchanges is annexed herewith as "Annexure - E". SEXUAL HARASSMENT: There was no case filled during the year, under the sexual harassment of women at workplace (Prevention, Prohibition & Redressal) Act, 2013. Further Company ensures that there is a healthy and safe atmosphere for every women employee at the workplace and made the necessary policies for safe and secure environment for women employee. ACKNOWLEDGEMENT: The Board wishes to place on record their sincere appreciation and acknowledge with gratitude the effort put in and co-operation extended by bankers, shareholders, employees at all levels and all other associated persons, bodies or agencies for their continued support. For and on Behalf of Board of Directors Nandlal J. Agrawal Chairman & Managing Director (DIN: 00336556 Date: 14/08/2015 Place: Ahmedabad |